Alta Devices, Inc. v. LG Elecs., Inc.

• Decision Date: 17 October 2018
• Docket Number: Case No. 18-CV-00404-LHK
• Citation: 343 F.Supp.3d 868
• Court: U.S. District Court — Northern District of California
• Parties: ALTA DEVICES, INC., Plaintiff, v. LG ELECTRONICS, INC., Defendant.

343 F.Supp.3d 868

ALTA DEVICES, INC., Plaintiff,

v.LG ELECTRONICS, INC., Defendant.

Case No. 18-CV-00404-LHK

United States District Court, N.D. California, San Jose Division.

Signed October 17, 2018

Dirk van Ausdall, Joseph Davidson Calhoun, III, John Dennis O'Connor, O'Connor and Associates, San Francisco, CA, for Plaintiff.

Steven Mark Levitan, Hogan Lovells US LLP, Menlo Park, CA, Alali Dagogo-Jack, Christian Emile Mammen, Hogan Lovells US LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 26

LUCY H. KOH, United States District Judge

Plaintiff Alta Devices, Inc. ("Alta") filed this suit against LG Electronics, Inc. ("LGE") that claims that LGE misappropriated its trade secrets. Before the Court is LGE's Motion to Dismiss. Having considered the parties' briefs, the relevant law, and the record in this case, the Court GRANTS IN PART and DENIES IN PART LGE's Motion to Dismiss.

I. BACKGROUND

Plaintiff Alta is a corporation that was founded in 2008 in Silicon Valley. ECF No. 1 ("Compl.") ¶ 8. As of 2011, Alta was the world's only known manufacturer of thin-film solar technology using Gallium Arsenide ("GaAs") for widespread commercial use. Id. ¶¶ 7–10. Such technology allows devices coated in the thin GaAs solar film to be "powered by this independent energy source." Id. ¶ 9. Defendant LGE is a Korean company and one of the world's largest electronics manufacturers. Id. ¶¶ 2, 38. Alta alleges that prior to June 2011, LGE had not attempted development of thin-film GaAs solar cells. Id. ¶ 38.

By 2011 and early 2012, Alta had already developed a "demonstrative production line" of thin-film GaAs solar cells and was "prepared to implement a small-scale production line with a capacity of 10MW, to be financed through a ‘Series D’ investment offering." Id. ¶ 11. Alta planned to then increase its scale to a "large, commercially viable manufacturing facility which could produce the thin-film device with quality, uniformity, and economic cost, first at a capacity of 40MW and then at a capacity of 165MW." Id. Alta alleges that LGE was one company that showed interest. Id. ¶¶ 38–39.

In early June of 2011, Alta and LGE entered into discussions regarding possible investment or other business opportunities related to Alta's technology. Id. ¶ 40. On June 13, 2011, Alta and LGE entered into a mutual non-disclosure agreement ("2011 NDA," or "Agreement") that prohibited both parties from disclosing or using "Confidential Information" disclosed by the other party in connection with discussions regarding the potential business opportunities. Id. ¶ 41. The 2011 NDA defines "Confidential Information" as:

[A]ny data or information that is proprietary to the disclosing party and not generally known to the public, whether in tangible or intangible form, whenever and however disclosed, including but not limited to: (a) any marketing strategies, plans, financial information, forecasts, or projections, operations, sales estimates, business plans and performance results relating to the past, present or future business activities of such party, its affiliates, subsidiaries and affiliated companies; manufacturing partners, or manufacturing licensees; (b) plans for customers, products or services, and customer or supplier lists; (c) any scientific or technical information, inventions, designs, schematics, technical drawings, architectures and architectural concepts, composition of matter, processes, procedures, formulae, improvements, technologies, methods or other innovations; (d) any concepts, reports, data, know-how, works-in-progress, designs, development tools, specifications, computer software, source code, object code, flow charts, databases, information or trade secrets; (e) any other information that should reasonably be recognized as Confidential Information of the disclosing party; and (f) any summaries and analyses thereof prepared by the receiving party.... Confidential Information need not be novel, unique, patentable, copyrightable, or constitute a trade secret in order to be designated Confidential Information.

Id. ¶ 42 (quoting Compl. Exh. A ¶ 1(i) ). The parties further agree that "the Confidential Information is proprietary to the disclosing party [ (Alta) ], has been developed and obtained through great efforts and expense by the disclosing party, and that disclosing party regards all of its Confidential Information as trade secrets." Id. ¶ 43 (quoting Compl. Exh. A ¶ 1(i) ).

To protect the value of the investment in the Confidential Information, the 2011 NDA restricts use of the Confidential Information to use in consideration of discussions regarding potential business activities among the parties:

The receiving party [ (LGE) ] agrees to use the Confidential Information solely in connection with the current or contemplated business relationship between the parties and not for any purpose other than as authorized by this Agreement without the prior written consent of an authorized representative of the other party. Further, the receiving party agrees not to reverse engineer, decompile or disassemble any Confidential Information. No other right or license, whether expressed or implied, in the Confidential Information is granted to the receiving party. Title to the Confidential Information will remain solely in the disclosing party. All use of the Confidential Information by the receiving party shall be for the benefit of the disclosing party and any modifications and improvements thereof (e.g., summaries and analyses thereof) by the receiving party shall be the sole property of the disclosing party).

Id. ¶ 44 (quoting Compl. Exh. A ¶ 3).

Alta alleges that two terms are covered under Section 5 of the 2011 NDA: (1) "the time for the parties' disclosure of Confidential Information," and (2) "the duration of the duty to hold in confidence the Confidential Information disclosed." Id. ¶ 45 (citing Compl. Exh. A ¶ 5). The text of Section 5 of the 2011 NDA specifically provides:

Term. The term for the parties' disclosure of Confidential Information under this Agreement ("Disclosure Period") shall be one (1) year (extendable by addendum) from the Effective Date. The parties' duty to hold in confidence Confidential Information that was disclosed during the Term shall survive for an additional three (3) years after the expiration of this Agreement.

Compl. Exh. A ¶ 5.

The 2011 NDA further provides in Section 6 that upon the request of the disclosing party, the

[r]eceiving party shall immediately return and redeliver to the disclosing party, all tangible material embodying the Confidential Information provided hereunder, and all notes, summaries, memoranda, drawings, manuals, records, excepts [sic], or derivative information derived therefrom, and all other documents or materials ("Notes") (and all copies of any of the foregoing, including but not limited to "copies" that have been converted to computerized media in the form of image, date, or word processing files either manually or by image capture) based on or including any Confidential Information, in whatever form of storage or retrieval, upon the earlier of (i) the completion or termination of the dealings between the parties contemplated hereunder; (ii) the termination of this Agreement; or (iii) at such time as the disclosing party may so request....

Compl. ¶ 46 (quoting Compl. Exh. A ¶ 6).

Alta alleges that as a result of the 2011 NDA, LGE gained information "showing the financial and technical feasibility of the mass-production of Alta Devices' solar film technology, testing information, and plans for improvement, as well as other Confidential Information." Id. ¶ 50.

On October 31, 2011, LGE visited Alta to learn more about Alta's technology, through which LGE gained additional Confidential Information. Id. Alta alleges that "[b]y November 7, 2011, [LGE] intentionally began to plan how to develop in-house Alta's technology." Id. Further, Alta alleges that LGE represented an intention to invest not only in the "Series D" investment, but also advancing stages of participation. Id. ¶ 51. Alta maintains that this representation led to LGE seeking and receiving further detailed information about the techniques and processes involved in the actual manufacturing of the solar film developed by Alta. Id. ¶¶ 51–55. However, after receiving this Confidential Information from Alta, LGE declined to make binding its previous tentative investment offer. Id. ¶ 56.

Alta alleges that in late 2013 and early 2014, LGE posed as a potential costumer interested in purchasing GaAs thin-film for incorporation onto its manufactured mobile devices and sought and received a sample of Alta's GaAs thin-film for testing its "charging efficiency." Id. ¶ 64. LGE then used this material for technical analysis and reverse engineering to assist LGE in developing its own manufacturing process. Id. LGE then developed its manufacturing capabilities using Alta's Confidential Information and is now producing very similar thin GaAs solar film while moving toward full-scale, mass-commercialized economical production. Id. ¶ 17. LGE is currently marketing its GaAs thin-film that Alta alleges is manufactured using Alta's Confidential Information. Id. ¶ 18.

Alta alleges that it only learned of LGE's misappropriation of Alta's trade secrets in mid-2016. Id. ¶ 65. Publications produced by LGE described solar cell structures manufactured using similar manufacturing techniques as Alta's, and an LGE patent application appears to incorporate similar aspects of Alta's production process and tooling. Id. ¶¶ 66–72.

As a result, Alta sought reassurances from LGE and requested that LGE return Alta's Confidential Information pursuant to the 2011 NDA. Id. ¶¶ 74–75, 78–79, 80–81, 83. LGE refused to return all of Alta's Confidential Information. Id. ¶¶ 77, 86. LGE also "unintentionally discarded" two of the five solar cell samples it had received from Alta. Id. ¶ 87. Moreover, Alta alleges that the...